Ferro Alloys Corporation Looking For Strategic Partners

Steelmakers Circle Ferrochrome Manufacturer

India’s Ferro Alloys Corporation is looking for strategic partners as the company looks to move up to the next stage.

Joint managing director Ashish K Saraf admitted to Indian TV station NDTV that his company is looking for a tie-up and that preliminary approaches have been made to steelmakers Baosteel, Posco, Vedanta, JSW, Tata Steel and Amtek Auto.

"We are actively looking to bring in strategic investors into Ferro Alloys. It could be Tata Steel, Bao Steel etc, anyone who has capacities and requirement for ferro-chrome," Mr Saraf told NDTV.
The company has also given a mandate to E&Y to look for international partners and sources suggest that part of the mandate is a sale of up to 75% of the equity in Ferro Alloys Corporation and 47% in associated company FACOR Alloys. These are the stakes held by the company’s promoters with the balance held by financial institutions, corporate bodies and the general public.

Ferro Alloys Corporation has significant chrome ore mining assets including its complex in Orissa, and this is what makes the company so attractive to steelmakers
Sources suggest that any bid for Ferro Alloys is likely to be in the region of Rs40-45 a shares – a 50% premium over the current market prices – which would value the promoter holding at around Rs600 crore (US$135 million).

Indian Steel Producers Increase Their Prices

Major Indian steel producers SAIL, JSW and Essar have increased prices of their products by up to Rs 2,500 ($55) a tonne due to rising input costs

Steel Authority of India Chairman S K Roongta announced on the sidelines of the SAIL Open Golf Tournament in New Delhi on Friday that his company was to increase its prices and private steel makers JSW Steel and Essar Steel later confirmed their price rise.

JSW Steel Director of Sales and Marketing, Jayant Acharya, said his company will review the rates again in mid-April to fix the prices for the next month.

"It is a preliminary review. We are partly offsetting the rise in raw material cost pressure," he said.

An Essar Steel spokesperson said, "The price increase is in the same range as of other steel producers. It is mainly due to steep rise in raw material prices."



The increase in prices by the companies is effective from April 1.

Indian Steel Prices Set To Rise

Indian steel prices look set to rise next month as rising raw material prices look set to take effect. JSW, Tata and SAIL all look set to increase their prices by about 10-20% according to some industry sources.

Coking coal prices have risen by over 50% over the past few months. BHP Billiton recently agreed a 55% rise with the major Japanese steelmakers for the April-June quarter.

Seshagiri Rao, Joint MD and group CFO of JSW Steel, told the Times Of India that adecision will be taken next month. "We are keeping a watch on the international pricing scenario. We will revisit our pricing structure next month." Mr Rao has also been quoted as saying: "Cost pressures are very strong at the moment. Prices are not affordable... in the short-term we have to pass through this cycle."

JSW Close To Buying American Coal Mines

JSW Steel is close to acquiring two coal mines in the American state of West Virginia, according to the Indian website, DNA.

The company has been looking to acquire coal assets across the globe. It has been importing coking coal from Australia and aims to secure 50% of its coal supplies through captive sources.

On completion of its current expansion plans JSW Steel is expected to hit production of 10 million tonnes and the increase in production will require an additional 5 million tonnes of coking coal.

JSW Expects Approval For Four Iron Ore Mines

India’s third-largest steel producer, JSW Steel Ltd., expects approval for four domestic iron ore mines as part of plans to secure supplies for a 40 per cent expansion in output..

Three of the licences were said by the company to be at “various stages” of approval although mining is ready to start at a fourth, near to JSW’s Vijayanagar plant in southern Karnataka state which has reserves of about 60 million metric tons

JSW aims to expand steel capacity to 11 million tons by March 2011. The company sources about 20 percent of its iron-ore needs from its own mines in India and plans to start a 3 million ton a year mine in Chile by the end of next year. About 40 percent of its iron-ore requirement is bought from state-owned NMDC Ltd., India’s largest producer, and a similar quantity from private miners.

JSW Steel To Sell Mozambique Coal Mine

JSW Steel may sell its coal mine in Mozambique to sister company JSW Energy as the mine has become commercially unviable for the steel
producer, a top company executive said. Although the deal size could not be ascertained, a person privy to the development said it could be around Rs 300 crore. JSW Energy, which is in the process of raising fund through a public issue to expand power generation capacity, is currently sourcing thermal coal from JSW Steel under a purchase agreement.

Sajjan Jindal-led JSW Steel had acquired 200 million tonne Mozambique block through its affiliate JSW Natural Resources Mozambique a few years ago hoping to extract coking coal to feed its steel plant at Vijayanagar, Karnataka. But, the initial exploration and drilling activities undertaken by the company in Mozambique has revealed that the block has thermal coal reserves instead. While thermal coal is used in power generation, coking coal goes into steel-making.

“Fortunately or unfortunately, around 80% of the coal is in the form of thermal coal at Mozambique. We will probably get it valued and sell to JSW Energy. The balance 20% of the coking coal will be used by our steel plants,” JSW group managing director Sajjan Jindal said. JSW Steel will soon appoint consultants to get exact valuation of the Mozambique mine, said another person familiar with the development.

The transfer of thermal coal mine will help JSW Energy meet raw material requirement of its existing and proposed power plants. It plans to raise generation capacity from 995 mw currently to 3,140 mw by 2010. Its maiden public issue to raise Rs 2,700 crore will open on December 7 and close on December 9.

“JSW Energy plans to import 5 million tonne of coal in 2010-11 as the power firm looks to expand generating capacity. The company will import 2 million tonne of coal each from South Africa and Indonesia, besides 1 million tonne from Australia,” Mr Jindal said.

Both JSW Steel and JSW Energy are scouting for coal mines in Australia, Indonesia and South Africa to feed raw material requirements of their steel and power businesses, respectively. JSW Steel had earlier said it has earmarked investments of $500 million for acquiring the mines overseas due to unavailability of good quality coal in India. India is expected to produce 500 million tonne of coal this fiscal.

In addition, the coal imports in the current year is expected at close to 50 million tonne due to demand-supply mismatch. This has forced several power companies to look at supply arrangements in the overseas markets.

Source: Economic Times

JSW Looking At Coal Mines Abroad

Sajjan Jindal-led JSW Group today said it is looking at buying coal mines abroad for feeding its growing steel and power businesses.

"We would be importing coal from Indonesia, South Africa and Australia and acquire coal mines in these countries over a period of time," JSW Group vice-chairman and managing director Sajjan Jindal told reporters here.

The group will import about 6.5 million tonnes (MT) of coal in this fiscal and about 10 MT in the next fiscal to part-meet the input requirement of its steel and power plants.

Of the planned imports, JSW Steel will ship in 4.5 MT in the current fiscal and about 5 MT next fiscal. JSW Energy will import 2 MT in FY'10 and 5 MT in the next financial year.

"Out of JSW Energy's 5 MT, 2 MT would come from Indonesia, another 2 MT from South Africa and one MT from Australia," he added.

JSW Steel needs coking coal to run over 6-MT plant in Karnataka while JSW Energy requires the dry fuel to feed the proposed over 3,000-MW power generation to become operational by the next fiscal.

Giving details about the company's strategy, JSW Group CFO Seshagiri Rao said: "Now we will also be more focused on the backward integration. We are in constant lookout for coal and coking coal resources overseas while remaining committed to volume growth in our businesses."

Source: Business Standard

High Ash Content To Force JSW Mozambique Cancellation

JSW Steel plans to abandon its coal mining project in Mozambique because of higher than expected ash content in the coking coal.

“We are looking at alternative sites, as the Mozambique project is commercially unviable,” Vice-Chairman and Managing Director Sajjan Jindal said.

The project has been put on hold after detailed studies. These showed burnt coal (ash) content is high, at 60 per cent. The company is now scouting for coal assets in Australia and some other countries, said Jindal.

The company has reported a 28 per cent rise in net profit at Rs 323 crore for the quarter ended September 30, 2009, compared with the same quarter last year. The increase was on account of a 54 per cent growth in crude steel production to 1.5 million tonnes. Also, the quarter saw a Rs 21-crore loss on foreign exchange transactions. This was a far smaller loss than the Rs 268-crore loss in the same quarter last year.

Net sales in the second quarter of this financial year for the Sajjan Jindal-controlled JSW Steel went up a marginal 1.9 per cent to Rs 4,730 crore, supported by gains from sales of carbon credits and growth in volume, from the comparative quarter last year.

Profit from operations fell 22.1 per cent, with a fall in steel prices. A one-time annual benefit of Rs 60.2 crore from carbon credit sale helped the company to improve the profit.

Source: Business Standard

JSW To Make Investment In Coal Mining

JSW group is slated to invest close to Rs 1500 crore in its captive coal mining operations in the state. The project is linked to the group's proposed power cum steel project in West Bengal. JSW Energy, the group's power generation arm, will flag off the group's plans in the state through a 800 MW thermal plant in the first phase.

"We will have to pump in no less than Rs 1500 crore for mining operations since we will have to undertake deep underground mining in some of the blocks we have been allotted in the state," Mr Biswadip Gupta, joint managing director and CEO of JSW Bengal Steel, said. "The advantage is that the coal is of good quality with high calorific value, he added.

JSW has been allotted steam coal blocks at Ichhapur and Gourangdih in addition to semi-coking coal ones at Purulia and Sitarampur in West Bengal. JSW group vice chairman Sajjan Jindal and Mr Gupta are due to travel to China later this week to scout for technology providers. It had earlier been in talks with mining companies in Ukraine for the same purpose.

Source: Economic Times

JSW Seeks Karnataka Iron Ore Mine

Jindal South West Steel Limited (JSW Steel Ltd), the flagship company of the JSW Group, is seeking allotment of a captive iron ore mine in the iron ore-rich Bellary-Hospet region of north Karnataka. The company has applied to the state government and is waiting for the grant of the mining lease.

The company currently procures iron ore from the open market for its steel plant at Toranagal in Bellary as the state government is yet to fulfil its assurance of grant of a lease for a mine with reserves of 110 million tonnes in the Bellary region.

The company needs its own mine to expand the steel plant to 11 million tonnes per annum. This is scheduled to commence in 2010. Currently, it operates a steel mill with a capacity of 7.8 million tonnes.

The company required around 25 million tonnes iron ore to feed its plant once the expansion was completed, said Sajjan Jindal, vice-chairman and managing director, JSW Steel Ltd.

“We have been looking for mines since the start of our steel plant. But some people have gone to court against allotment of mining lease to us. We are waiting for the state government to sanction certain mining concessions. Once these come, we will take up the next phase of expansion,” Jindal told Business Standard.

Acquisition of a mine in Bellary is crucial for the company as it is in the process of expanding its steel-making capacity to 11 million tonnes per annum by 2010. The company has also received the state government’s approval to further expand the capacity to 16 million tonnes per annum at an investment of Rs 20,000 crore.

He said the proposed acquisition of the mine would meet around 50 per cent of the company’s raw material requirement. The the remaining would be procured from the open market, he added.

“There are not enough deposits at the mine we are looking to acquire. But, we are also developing new technologies to use low-grade iron ore.”

JSW Steel Ltd is the single-largest investor in the state. Its investments amount to Rs 21,700 crore.

For the year ended March 2009, the company reported a 73 per cent drop in its net profit to Rs 458.5 crore on a turnover of Rs 15,179 crore, a growth of 20 per cent over the previous year.

Source: Business Standard

JSW Steel To Import 5mn Tonnes Of Coking Coal

JSW Steel Ltd will import 5 million tonnes of coking coal in FY10 at an average price of $100 a tonne, a top official said on Tuesday.

"We will import 5 million tonnes of coking coal... the average (price) is about $100," Managing Director Sajjan Jindal told reporters on the sidelines of a conference.

Last year the company imported 3 million tonnes of coking coal, he said.

It also expects iron ore purchases from NMDC to be 33 percent cheaper this fiscal, he said.

JSW Steel, India's No. 3 producer, which has an annual capacity of 7.8 million tonnes, expects production to rise 72 percent this fiscal.

Source: Reuters

JSW Signs $100 Per Tonne Coking Coal Contract

JSW Steel, India's largest steelmaker by capacity, has signed a coking coal contract for the year at $100 per tonne, said Sajjan Jindal, vice chairman and managing director. He said the deal was signed with an Australian company, but refused to divulge its name.

Last year, JSW Steel contracted coking coal at $305 per tonne. Jindal said that the company is currently buying iron ore from the spot market at $17-18 per tonne.

On Thursday, JSW Steel reported that its net profit on a standalone basis dropped to Rs 49 crore in the quarter ended March 31, 2009, from Rs 370 crore in the same period last year. The company said it had sourced raw material at a very high price in the second and the third quarters. However, steel demand was low and inventories piled up in the quarters, which it cleared in the fourth quarter.

Jindal said, "In the March quarter, we sold all the excess inventories of the third quarter. The raw material was bought at high costs and steel prices were depressed." On a yearly basis, JSW Steel posted standalone net profit of Rs 458.5 crore in FY09 against Rs 1,728 crore in FY08.

However, on a consolidated basis, the company reported a net loss of Rs 40 crore for the March quarter against a profit of Rs 357 crore in the same period last fiscal.

Seshagiri Rao, director (finance), said, "This loss on consolidated basis was basically because of the huge write-downs of inventories at our US operations. We have written down inventories worth $54 million in the fourth quarter." Jindal said the utilisation levels at the US plant currently are just 10-15% as the steel market in that country isn't doing well.

On a standalone basis, net sales for the fiscal stood at Rs 14,000 crore, a growth of 23% over the previous fiscal. JSW Steel said it could not maintain margins despite huge volume growth and higher realisations as the cost of production has gone up by 49%. Jindal said, "The Ebidta margins dropped by 8.5% and stood at 21.8% for the fiscal ended March 31."

Source: DNAIndia

JSW Looks Nearer To Home For Exports

Reports from India suggest that the country's third-largest steel producer, JSW Steel Ltd, is to focus its export drive away from Europe and the US after a decrease in demand from those areas.

The company's director of finance Mr MVS Seshagiri Rao told Reuters: "In India, demand definitely is far better. Worldwide, there is no major improvement. Instead of exporting to Europe and US, we will sell to Africa, Sri Lanka, Nepal and other countries."

Profits plunged at Indian steel firms at the back end of 2008 as sales and margins both took a hit. JSW posted a loss in the December quarter due to foreign exchange losses, lower sales and higher prices of raw material such as coking coal and iron ore.

Negotiations are under way for new coking coal contracts and speculation suggests that steel companies are looking at a price of $100-120 a tonne, compared to $305 last year.

JSW Steel imports all of its coking coal requirements although it buys its iron ore from local sources.

JSW Negotiating For 66 Percent Coking Coal Price Cut

Indian steel manufacturer, JSW Steel, is negotiating a 66 per cent lower rate for coking coal from global suppliers at $100 per tonne, Vice-Chairman and MD Sajjan Jindal said.

JSW Steel has already negotiated a 43 per cent cheaper rate for coking coal from global mining major Rio Tinto for the January-March quarter at USD 175 a tonne, against the contracted price of $305 a tonne.

Jindal said the long-term coking coal contracts for the next fiscal would ease out the company's input cost pressure, which partially ate into its margins as it reported a net loss of Rs 127.50 crore [Rs 1.275 billion] for the third quarter of 2008-09.

Selling at $96 a tonne last year, coking coal prices touched $300 a tonne FOB under long-term contracts in the international market. Coking coal is a vital raw material in steel-making.

After touching their peak during the first-half of 2008, commodity prices including that of coking coal fell by over 60 per cent in the spot market due to the global economic crisis.

However, bound under long-term contracts, firms like SAIL and JSW Steel failed to reap the benefits of the price correction.

SourcE: Economic Times

JSW May Look At United Coal

Sajjan Jindal-controlled JSW Steel may look at acquiring US-based United Coal Company, which has reserves in excess of 165 million tonnes.

Seshagiri Rao, director (finance), JSW Steel, declined to comment if the firm had submitted a bid for the US company saying: "There are many assets on sale, this is one of the assets available for sale now."

However, with or without United Coal, JSW Steel would achieve 50 per cent raw material security by 2011-12.

Rao said with the Mozambican licence, the company would get two million tonne (mt) of coking coal next year and then step it up to 4.5 mt in three years. Also, the company has been allotted 69 per cent in a Jharkhand coal block.

By 2011-12, group company Siscol would achieve a capacity of 11 mt and have a coking coal security of 50 per cent. At present, JSW imports 100 per cent of its coking coal needs.

If JSW decides to bid for United Coal, it would be in tandem with the strategy being pursued by most steel-makers to secure raw material sources.

Coking coal contracts for the new year have been sealed by most players at $305 a tonne, an increase of more than 200 per cent over the previous year.

Moreover, coking coal accounts for 50 per cent of the cost of steel production.
Also, the quality of coking coal in India is not suitable for steelmaking and, therefore, companies have to depend on imports.

JSW is stepping up iron ore security as well. The company will invest around Rs 5.5billion in its Chilean mining concessions, which would ensure a 50 per cent security by June 2009. The company plans to hedge the iron ore.

However, JSW would have to strengthen its raw material linkages in line with its capacity expansion. The company plans to enhance capacity to 31 mt by 2020. In FY08, JSW had a crude steel production of 3.6 mt.

Source: Business Standard

JSW Considers Chilean Iron Ore Import

JSW Steel, India's third largest steel maker, will explore the possibility of importing iron ore from its mine in Chile and sell it in the local market.

The Sajjan Jindal-controlled company had secured prospecting licences through its Netherlands-based subsidiary to explore and exploit magnetite iron ore deposits in northern Chile's Atacama region.

"We will explore the possibility of selling Chilean iron ore in India. The Chile plant will act as a natural hedge to iron ore selling in India," said a top company executive.
The company has paid $52 million for acquiring mining licences spread. The move was part of the company's efforts to augment captive sources of iron ore and coal for its local steelmaking operations.

Source: Business Standard